More foreign insurers eye presence in Philippines
MANILA, Philippines — More foreign companies are likely to enter the insurance business in the Philippines as the final tranche of the increase in capital requirement – a move that would impact small local firms – nears implementation.
The Philippine Insurers and Reinsurers Association (PIRA), the umbrella organization representing the collective interests of the non-life insurance industry in the country, said a number of foreign firms have expressed interest to do business here to ramp up the local insurance sector.
“We were approached by Koreans for M&A (mergers and acquisitions). They represent Koreans, Thai, and Japanese capital,” PIRA executive director Michael Rellosa told The STAR.
“There’s also another one that is international, but they have a company in Thailand. There are many options [for our members],” he said.
To enter into mergers and acquisitions, either with local firms or international companies, is among the top options for firms that are not able to comply with the mandated hike in capital requirement.
Under the Insurance Code, existing insurers must have a net worth of at least P1.3 billion by end-December this year from the current P900 million.
Unfortunately, not all firms will be able to comply, especially as the pandemic trimmed the net worth of insurance companies in the past two years.
Rellosa said PIRA’s members are down to 56 from 130 and this could further be slashed to around 40 by next year.
While non-compliant firms could just throw in the towel and give up their licenses, Rellosa said this may not be the option for many.
“When you give up your license, you don’t get your capital back right away. You have to wait for a period before the capital is returned to you. So, very few of the insurance companies, I think, would opt for that,” Rellosa said.
“I think they would rather look for M&As. So, we will see more of that,” he said.
In fact, foreign firms have already started coming in, such as that of Singaporean company SeaInsure PG Pte. Ltd.
Last month, Filipino-owned Insular Life (InLife) teamed up with the local unit of a Singaporean firm in a bid to ramp up its products and widen its reach.
InLife recently entered into a joint venture agreement with Oona Philippines Holding Corp. for its general insurance subsidiary, Mapfre Insular Insurance Corp. (MIIC).
Oona Philippines is a subsidiary of Oona Singapore, which aims to become the pre-eminent digital general insurance platform in Southeast Asia. It is backed by Warburg-Pincus, a global private equity firm and a leading global growth investor with more than $80 billion in assets under management.